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The following is a list of costs incurred by several manufacturing companies: a. Bonus for vice president of marketing b. Costs of operating a research laboratory c. Cost of unprocessed milk for a dairy d. Depreciation of factory equipment e. Entertainment expenses for sales representatives f. Factory supplies g. First-aid nurse for factory workersh. Health insurance premiums paid for factory workers i. Hourly wages of warehouse laborers j. Lumber used by furniture manufacturer k. Maintenance costs for factory equipment l. Microprocessors for a microcomputer manufacturer m. Packing supplies for products sold, which are insignificant to the total cost of the product n. Paper used by commercial printer o. Paper used in processing various managerial reports p. Protective glasses for factory machine operators q. Salaries of quality control personnel r. Sales commissions s. Seed for grain farmer t. Television advertisement u. Prebuilt transmissions for an automobile manufacturer v. Wages of a machine operator on the production line w. Wages of secretary of company controller x. Wages of telephone operators for a toll-free, customer hotline Instructions Classify each of the preceding costs as a product cost or period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for preparing your answer. Place an “X” in the appropriate column.

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Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

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BuyFindarrow_forward

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
Chapter 1, Problem 2PB
Textbook Problem
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The following is a list of costs incurred by several manufacturing companies:

a. Bonus for vice president of marketing

b. Costs of operating a research laboratory

c. Cost of unprocessed milk for a dairy

d. Depreciation of factory equipment

e. Entertainment expenses for sales representatives

f. Factory supplies

g. First-aid nurse for factory workersh. Health insurance premiums paid for factory workers

i. Hourly wages of warehouse laborers

j. Lumber used by furniture manufacturer

k. Maintenance costs for factory equipment

l. Microprocessors for a microcomputer manufacturer

m. Packing supplies for products sold, which are insignificant to the total cost of the product

n. Paper used by commercial printer

o. Paper used in processing various managerial reports

p. Protective glasses for factory machine operators

q. Salaries of quality control personnel

r. Sales commissions

s. Seed for grain farmer

t. Television advertisement

u. Prebuilt transmissions for an automobile manufacturer

v. Wages of a machine operator on the production line

w. Wages of secretary of company controller

x. Wages of telephone operators for a toll-free, customer hotline

Instructions

Classify each of the preceding costs as a product cost or period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for preparing your answer. Place an “X” in the appropriate column.

Chapter 1, Problem 2PB, The following is a list of costs incurred by several manufacturing companies: a. Bonus for vice

To determine

Classify each of the costs as either a product cost or a period cost, and to indicate whether it is a direct material cost, direct labor cost, or a factory overhead cost if it is product cost, and whether it is a selling expense, or administrative expense if it is period cost.

Explanation of Solution

Product costs:

Product costs are the costs which are incurred in the production of the goods. These costs include the direct materials cost, direct labor cost, and factory overhead cost.

Period costs:

Period costs are the costs other than the product costs. These costs are not incurred in manufacturing the goods. These costs include the administrative expenses, and selling expenses.

Classify each of the costs as either a product cost or a period cost, and indicate whether it is a direct material cost, direct labor cost, or a factory overhead cost or whether it is a selling expense, or administrative expense.

CostProduct CostsPeriod Costs
Direct Materials CostDirect Labor CostFactory Overhead CostSelling ExpenseAdministrative Expense
a.   X 
b.    X
c.X    
d.  X  
e.   X 
f.  X  
g.  X  
h. X   
i.  X  
j.X    
k.  X  
l.X    
m.  X  
n.X    
o...

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Chapter 1 Solutions

Managerial Accounting
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Ch. 1 - Management process Three phases of the management...Ch. 1 - Direct materials, direct labor, and factory...Ch. 1 - Prime and conversion costs Identify the following...Ch. 1 - Product and period costs Identify the following...Ch. 1 - Cost of goods sold, cost of goods manufactured...Ch. 1 - Jakes Cabins is a small motel chain with locations...Ch. 1 - Indicate whether each of the following costs of an...Ch. 1 - Indicate whether the following costs of Procter ...Ch. 1 - Which of the following items are properly...Ch. 1 - For apparel manufacturer Abercrombie Fitch, Inc....Ch. 1 - From the choices presented in parentheses, choose...Ch. 1 - From the choices presented in parentheses, choose...Ch. 1 - Classifying costs In a service company A partial...Ch. 1 - Classifying costs The following is a manufacturing...Ch. 1 - Financial statements of a manufacturing firm The...Ch. 1 - Manufacturing company balance sheet Partial...Ch. 1 - Cost of direct materials used in production for a...Ch. 1 - Cost of goods manufactured for a manufacturing...Ch. 1 - Cost of goods manufactured for a manufacturing...Ch. 1 - Income statement for a manufacturing company Two...Ch. 1 - Statement of cost of goods manufactured for a...Ch. 1 - Cost of goods sold, profit margin, and net income...Ch. 1 - Cost flow relationships The following information...Ch. 1 - The following is a list of costs that were...Ch. 1 - The following is a list of costs incurred by...Ch. 1 - A partial list of Foothills Medical Centers costs...Ch. 1 - Manufacturing income statement, statement of cost...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - The following is a list of costs that were...Ch. 1 - The following is a list of costs incurred by...Ch. 1 - A partial list of The Grand Hotels costs follows:...Ch. 1 - Several items are omitted from the income...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - Comfort Plus, Inc., has a hotel with 300 rooms in...Ch. 1 - Hilton Hotels and Marriott International:...Ch. 1 - Comparing occupancy for two hotels Sunrise Suites...Ch. 1 - Occupancy for a Hospital The Valley Hospital...Ch. 1 - Passenger load on a flight Eastern Skies Airlines...Ch. 1 - Ethics in Action Avett Manufacturing Company...Ch. 1 - Communication Todd Johnson is the Vice President...Ch. 1 - For each of the following managers, describe how...Ch. 1 - The following situations describe scenarios that...Ch. 1 - Geek Chic Company provides computer repair...Ch. 1 - Which of the following items would not be...Ch. 1 - A review of Plunkett Corporations accounting...Ch. 1 - A firm has 100,000 in direct materials costs,...Ch. 1 - In practice, items such as wood screws and glue...

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